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Property in Brazil 'will be boosted by World Cup'

Date added: 13th July, 2010 at 13:34
(view all articles from July, 2010)

Categories: World Cup 2014

Property in Brazil will be one of the sectors that will be boosted by the coming of the 2014 World Cup, according to one commentator.

Writing for the Motley Fool, Matt Koppenheffer stated that real estate, retail, financial services, transportation, sanitation, electricity and gas are all business areas that will see greater returns on the back of the sporting tournament, citing an Ernst & Young (E&Y) report.

Indeed, executive director of Sotherby's International Realty South Africa Ya'el Geffen wrote for realestateweb that when the World Cup was held in Paris, property in the city gained 55 per cent in worth year-on-year after the tournament. Elsewhere, in Athens, Sydney, Barcelona and Atlanta, the value of real estate was seen soaring by 19 per cent after the event, compared with five years beforehand.

The journalist noted that E&Y had advised that the event could be worth $80 billion to the nation and investors could benefit from buying into those industries that will see the most positive impact from the economic boost.

Much of the money that will enter the country will go to the population, the report said, as improved profits for businesses will see salaries rise, with around £35 billion extra going to workers, increasing consumer spending, Mr Koppenheffer reported.

Investors prepared to search for opportunities may be highly rewarded for speculating in some smaller Brazilian firms that are not listed on the US stock exchange, while buying into overseas companies that operate in Latin America's largest economy may also be a good idea, the commentator suggested.

Non-Brazilian businesses that could offer strong returns to speculators include Wal-Mart, as Brazil is its second-largest international market in terms of store count. Unilever could also present opportunities since almost half of its 2009 sales were made in developing markets like the country.

However, there are many larger firms that are listed on the US stock exchange that could see a boom due to the World Cup. Mr Koppenheffer chose his favourite five.

Brewer Ambev is likely to profit on increased consumer spending, as it is the largest producer of beer in Latin America - claiming a 70 per cent market share - and the fourth largest in the world, he suggested.

Vale is an iron ore, aluminium, copper and manganese company and is one of the largest firms in the world. Based in Brazil, it is expected to benefit from the massive investment that will go into infrastructure to support the World Cup, where raw materials will be needed, the journalist noted. Additionally, it owns a port as well as a network of maritime terminals and railroads.

Other sectors that Mr Koppenheffer believes will see a rise in income include banking and financial services, as well as utilities. Banco Bradesco holds around 14 per cent of savings in the nation, while CPFL and Companhia de Saneamento are two of the largest companies in Brazil that deal with electricity, water and sanitation. ADNFCR-1477-ID-19887082-ADNFCR